1. A company has Net Income of $20, which included $4 of depreciation expense. T
ID: 2714866 • Letter: 1
Question
1.
A company has Net Income of $20, which included $4 of depreciation expense. There were no other noncash expenses in Net Income and there were no gains or losses. Accounts receivable was $40 at the beginning of the year and $25 at the end of the year. Accounts Payable was $25 at the beginning of the year and $15 at the end of the year. Inventory was $22 at the beginning of the year and $27 at the end of the year. All other balance sheet accounts were unchanged over the year. What was the company’s Cash Flow from Operating Activities?
a. $16
b. $44
c. $24
d. $54
e. $4
2.
2. A company put together a preliminary version of its financial statements. Its Net Income was $300, its Depreciation Expense was $80, and its Cash Flow from Operations was $190. The accountant found an error in computing straight-line Depreciation Expense. It should have been $70. What is Cash from Operations after fixing this mistake? (you can ignore taxes)
a. $190
b. $200
c. $180
d. $370
e. $0
3. A company sold PP&E for $100 cash. Prior to the sale, the net book value of the PP&E on the financial statements was $80. Thus, the company recorded a Gain on Sale of Equipment of $20 in Net Income. What is the investing cash flow in this transaction?
a. $20
b. $120
c. $100
d. $80
e. $0
4. During the year, a company sold $500 of inventory, paid $400 to suppliers for inventory previously purchased on account, purchased $100 of inventory for cash, acquired $75 of inventory from another company in an acquisition, and translated into US dollars the value of inventory held in foreign subsidiaries, which increased inventory by $25. Which of these Inventory transactions would show up in the operating section of the SCF? (check all that apply)
a. Paid $400 to suppliers for inventory previously purchased on account
b. Acquired $75 of inventory from another company in an acquisition
c. Sold $500 of inventory
d. Purchased $100 of inventory for cash
e. The value of inventory held in foreign subsidiaries increased by $25 when translated into US dollars
5. A company had Revenue of $1000, Depreciation and Amortization Expense of $100, Interest Expense of $100, and Tax Expense of $50. All other Expenses were $500. What was the company’s EBITDA?
a. $300
b. $250
c. $1000
d. $400
e. $500
Explanation / Answer
1.c. $24
2.d. $370
3.c. $100
4.e. The value of inventory held in foreogn subsidiaries increased by $25 when translated into US dollars
5. $250
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